A report to be released by the Federal Government today claims more than 100,000 people are misusing business, student and holiday visas to work illegally in Australia.

The independent review by lawyer Stephen Howells stated that the failure of migration laws was sending the ''unmistakable message'' overseas that Australian authorities are toothless, and ''you only have to get here'' to get work.

Currently when workers are caught working illegally, the worst penalty they face is a taxpayer-funded flight home, and this is being exploited by organised rackets, the review says.

In response to the report, The Age reported the government is expected to announce a major crackdown on employers who hire illegal workers - including a $10,000 fine per worker caught.

Previously employer groups had resisted such sanctions under the Howard government, after a 1999 review warned of the growing problem. ''We now have very clear evidence that the previous approach of better education hasn't worked,'' said the Immigration Minister Chris Bowen. ''The way to deal with skills shortages or labour shortages is not to embrace illegal labour.''

A 2007 law providing sanctions against employers was watered down after business groups complained that there was no way of checking if staff were illegal, and that it was difficult to fill jobs in agriculture, construction and hospitality.

An online system, VEVO, now allows employers to check staff visas, and was used for 485,330 work checks last year. Bowen said there was ''simply no excuse'' for employers not to use the online system.

Howells said the 2007 law had failed. Apart from one man who pleaded guilty, there had been no successful criminal prosecutions. This was despite the Immigration Department identifying 100 breaches, and 10 cases of systematic abuse with large numbers of workers and ''serious organised rackets''.

Under the Howells recommendations, employers or labour hire firms would be fined $10,000 per worker if they hire, refer, or enter into verbal contract to hire a non-citizen. Britain, the US and New Zealand have similar civil penalties systems as a deterrent.

Last year the department identified 53,860 people overstaying visas, and most of them were working illegally.